Custodian Investment Profit Hit by N17bn Fair Value Loss

Custodian Investment Plc, a non-bank financial institution, has been hit by a N17.62 billion fair value loss on financial assets that undermined profit as insurance companies are feeling the pinch 0f rising bond yields.

For the year ended December 2021, Custodian Investment’s net income reduced by 20.74 percent to N10.05 billion in December 2021 from N12.68 percent the previous year.

The return on average equity fell to 11.73 percent in December 2021 from 16.90 percent as at December 2020, according to calculations by MoneyCentral.

Some insurers would have recorded profit growth if they had not booked huge fair value loss on investment securities. However, the good tidings  are that these items are executional and one off, and what that means is that it doesn’t fall within the ordinary activity of an entity.

Financial assets held at fair value through profit or loss comprise assets held for trading and those financial assets designated as being held at fair value through profit or loss.

AIICO Insurance Plc, Mutual Benefit Assurance Plc, Linkage Assurance Plc, and African Alliance Plc collectively incurred fair value loss of N48.40 billion as at December 2021.

Nigeria 10-year bond yield was 10.77 percent on Friday March 18, according to over-the-counter interbank yield quotes for this government bond maturity.

Further analysis of the financial statement of Custodian Investment shows gross revenue rose by 14.22 percent to N85.74 billion in December 2021 from N75.06 billion.

A breakdown of the top line (revenue) shows gross premium written (GPW) grew by 16.05 percent to N66.90 billion in December 2021 from N57.64 billion as at December 202o.

Gross premium income (GPI) rose by 13.89 percent to N66.29 billion in the period under review from N58.14 billion as at December 2020.

The company said revenue growth could be attributed to the resilience of the group, the diversity of its product offerings, commitment of its staff and the unwavering support of its board of directors.

Wole Oshin, managing director of Custodian Investment,  expressed optimism for a brighter future for the Custodian Group, which has investments in life and non-life insurance, pension fund administration, trusteeship and real estate businesses.

He expressed hope that the incremental contribution will flow in from the group’s real estate business segment, which is being restructured to boost the fortunes of the company.

While recognising their contribution, Oshin appreciated the steadfastness of its clients, agents, brokers and all other stakeholders in the insurance, pension, and investment value-chain to the Custodian Group.